As is becoming clear, there's nothing cheap about affordable health insurance for the masses. Defining the actual cost to insurers and others has been a tricky matter. Now, someone has put a number on the Patient Protection and Affordable Care Act's overhead.
Health Affairs Blog has produced a study based on numbers provided by the Centers for Medicare and Medicaid Services that estimates that private and government overhead directly attributable to the Patient Protection and Affordable Care Act will add an average of 20 percent per year to that cost.
In total dollars, the blog's study estimates, overhead will have added $273 billion by 2022.
The biggest jump came last year, of course, when overhead for private and government services related to PPACA rose by 45 percent. This year, the study says PPACA additional overhead will hit nearly 33 percent. By 2017, the study's calculations say, annual PPACA overhead cost will begin to settle into a pattern of about 20 percent per year. In raw dollars, that's more than $30 billion a year.
The study also calculated the annual overhead cost per newly insured individual. While that number will vary somewhat, the estimated average is $1,375 a year.
“Most of this soaring private insurance overhead is attributable to rising enrollment in private plans, which carry high costs for administration and profit,” write the authors, David Himmelstein and Steffie Woolhandler. “The rest reflects the costs of running the exchanges, which serve as brokers for the new private coverage and will be funded (after initial startup costs) by surcharges on exchange plans' premiums.”
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
